May Crude Oil: Crude Oil turned over on sharp sell offs on Monday as profit taking kicked in after a new 2011 high was posted overnight at 11346. Prices settled at 10992 but fell as low as 10868 in after-market trading. A Bearish engulfing pattern emerged on the daily chart, warning for sideways trade with the potential for a bearish trend reversal developing. Still, the 38-day uptrend line is intact at 10815 and therefore generates a Mixed to Lower bias for Tuesday. That said, Longs currently in the market may want to consider reducing exposure.

Traders can take a scalping approach today with mild shorting opportunities seen against 10900-10950 R1, 10992-11045 R2 and 11070-11100 R3. Stops of 16 cents are suggested above each zone with an initial profit objective of 35 cents for scalp trades. Initial downside targets today are placed at 10868-10815S1 and 10770-10750 S2. The downside break of 10750 is Bearish on trade triggering drives to lower S3 and S4 targets at 10700 to 10600 range.

On the upside, traders can lightly scalp long on dips against both 10868-10815 S1 and 10770-10750 S2 support zones. Stops of 16 cents are suggested below each range with an initial rebound objective of 35 cents. After that, long positions should be scaled out against R1 to R3 Resistance targets. The upside flip above 11070-11100 R3 Pivot Resistance shifts the intra-day tone to Bullish gunning for 11150-11200 R4 with room to retest 2011 highs at 11321-11346.

Daily Chart:

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Weekly Chart:

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